Define economics in terms of scarcity - CORRECT ANSWER economics addresses the problem of having too many wants but too few resources to achieve them all which brings in scarcity (the fact that must make choices given the resource limitations she or he faces)
Know the difference between microeco...
Econ 211 Exam 1 |Rated A+
Define economics in terms of scarcity - CORRECT ANSWER economics addresses the
problem of having too many wants but too few resources to achieve them all which
brings in scarcity (the fact that must make choices given the resource limitations she or
he faces)
Know the difference between microeconomics and macroeconomics issues -
CORRECT ANSWER Macroeconomics: focuses on the broader issues we face as a
nation
Example: whether people buy Brooks or Sperrys
Microeconomics: deals with decision making by individuals, businesses and industries
Example: which OJ to buy, where to vacation, which job to take
Distinguish opportunity cost from trade-off - CORRECT ANSWER There is always a
trade-off (opportunity cost) with any CHOICE
Understand the role of incentives in economic decisions - CORRECT ANSWER
Incentives can steer people towards making certain choice
Ex: taxes on cigs are meant to deter smoking by making them more expensive
Be familiar with the concept of a model - CORRECT ANSWER
In terms of factors of production, money is considered to be?
a. land
b. capital
c. entrepreneurship
d. labor
e. all of the above - CORRECT ANSWER e. all of the above
Trade-off between equity (fairness) and efficiency in economics - CORRECT ANSWER
Equity: fairness
Efficiency: deals with how well resources are used and allocated
Be able to classify economic questions/statements as normative or positive. -
CORRECT ANSWER Positive analysis: analysis concerned with what is (can be
answered using information and facts)
Example: Do SUV sales increase when gas prices go down?
Normative analysis: analysis concerned with what ought to be (based on
beliefs/opinions, cannot be answered by using facts)
Example: Weed should be legalized in Tennessee to increase tax revenue
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